Cloud services help SHI redefine the buyer-seller dynamic for huge efficiency gains

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: Ariba, an SAP Company.

This BriefingsDirect discussion, from the recent 2013 Ariba LIVE Conference in Washington, D.C., explores how SHI International teamed with Ariba to streamline IT product discovery and purchasing processes for large agricultural machinery builder AGCO.

A global provider of IT products, procurement, and related services, with more than $4 billion in annual sales, SHI has tapped into the networked economy to improve their business productivity and sales. To learn more about how agile procurement works well, we're joined John D’Aquila, Applications Support Manager at SHI International Corp. in Somerset, New Jersey.

The interview is conducted Dana Gardner, Principal Analyst at Interarbor Solutions. [Disclosure: Ariba, an SAP company, is a sponsor of BriefingsDirect podcasts.]

Here are some excerpts:

Gardner: What’s different now about buying and selling IT products and services than, say, three or four years ago?

D'Aquila: One thing that has really changed is that IT asset management is a hot topic right now. Customers want to track their purchases much more efficiently than in the past, so they can know exactly how much they have at all times. They want to know if they're over-licensed, under-licensed on the software side, or as far as hardware goes, they want to make sure that they have enough hardware in stock, but don’t have too much. You don’t want to have whole closets and warehouses full of equipment.

Gardner: You have to be very precise, and therefore, you need to have the data about what’s going on across your supply chain.

D'Aquila: Correct. That's where electronic commerce comes in, in IT asset management. I always say that it starts with a great PO, because we want to make sure that when we receive that purchase order, we have as much information that the customer is going to be looking for us to report on downstream.

Years later, if they come back to us and say, how many desktops did we purchase over the last three years and who are they for, the only way we could tell them who it was for is if they told us that information on the purchase order.

Streamlined solution

So the best way to get that is to have a streamlined solution that everyone is using when they're procuring their desktop PC, versus the situation where one PO came over handwritten, one PO came over via fax, and the level of information on each of those POs would be different.

At SHI, as part of every customer QBR or RFP demonstration, we definitely focus on the shi.com portal, which is a standalone website solution to provide them the ability to procure their products from a customized catalog solution.

D'Aquila

Then we show them how we can leverage our check-out question process to collect the information, to make sure that every request and purchase order comes over with that same level of information. If a customer has a solution like Ariba, then we explain to them how we can work with that.

Gardner: Tell us about your organization, how it came about, what you're doing, and why this whole notion of being ultra-efficient across your purchasing processes is essential to your business.

D'Aquila: SHI is a global provider of IT products and solutions. We're headquartered in Somerset, New Jersey, and as you mentioned before, we had over $4 billion in revenue last year. This year we expect to surpass $5 billion.

The number of employees has doubled in four years. So there is definitely an investment internally to enhance the backbone of SHI, which is the sales force and the operations departments.

One thing that I always like to talk about is that as I walk in in the morning -- and all employees walk in -- Above the SHI logo it says "Innovative Solutions and World Class Support." This reminds every employee, as they walk in, that our customers are the reason we're successful, and the way we retain those customers is by providing those innovative solutions and world-class support.

Gardner: How are we getting people to be more efficient and more data driven when it comes to procuring their IT services and products?

Customer driven

D'Aquila: The whole Ariba process is typically driven by the customer. In the early stages of evaluating a solution, we can tell them, if they ask us which one have you worked with and what are the benefits of each, but typically the decision has already been made by the time they come to my team.

We'll explain to them our capabilities around that, and how we could seek benefits from little pieces of information on either the punch-out setup request or on the purchase order.

For example, AGCO has been a customer of SHI’s for many years. The spend was at some growth, but it was really a slow trend up. Eric Deese is the contractor who is working on the project of enabling Ariba throughout AGCO.
We had a conference call to discuss the requirements and his scheduling and understanding his expectations of what we were going to do. From there, we put the resources in place. We did some testing with Eric, a full test, from the purchase order to invoice, to make sure that everything worked properly. Then, I handed it over to Tammy Wagner, who is the Account Executive for AGCO.

One thing that we really like to focus on with customers is, rather than show them everything we could sell, we show what they actually need and want. So we've tailored a catalog around the requirements that Eric provided to make it easier for his users to find products.

Since we've gone live, the number of products purchased from SHI and the different product lines has tripled. So it's been a great success story.

Gardner: How are these trends around more process-driven efficiency goals translated into actual savings or efficiencies?

D'Aquila: One thing is that they control their spend. In speaking to Eric, he explained that the AGCO users were buying software from everywhere. Some people would buy a shrink-wrap copy of software, which is really not the right way to buy software. They would use their P-Cards, and then they would just do an expense report, so it wouldn't be captured properly within their cost centers and the internal accounting.

Now, he said, all the employees of AGCO are going into the Ariba application and procuring their software from SHI. So maverick spend has been controlled.

Single-point purchasing

Also, we can show Eric the spend with SHI and how it has grown. We work with you. Your overall spend has helped you secure better pricing with the manufacturers and with SHI, which in the long-term will turn over savings for AGCO.
Gardner: As IT organizations, in particular, are looking to move more toward an operations expenditure (OPEX) approach rather than the capital expenditure (CAPEX), they're looking for services, for leasing, and for outsourcing types of services. How is that impacting your business and how does that also impact the buying and selling process?

D'Aquila: There has definitely been a trend of more operational expense, versus capital. We notice that customers are no longer treating a desktop as a commodity. It's more of a rental. You're going to use it for a few years and it's no longer going to be expected to run the life of an employee.

So the catalog refresh cycles, have changed, as far as the number of items in the catalog. There is definitely standardizing and making sure that everyone in the organization has the same type of product, so they can get better imaging and so forth.

There is also a trend toward bring your own device (BYOD) that has been coming our way. Organizations are telling their employees, here is your minimum specifications, you can buy any PC, but it's out of your own pocket. It's up to you to purchase it, but you can bring that to work, whether it's a mobile device or even a laptop.


Today, there may be a customer that only purchases software from SHI. We want to introduce them to the fact that although we were Software House International, we are SHI now, because we sell all products that are IT related -- hardware, services, and solutions.

Gardner: And because we are here at Ariba LIVE, what are you hearing that excites you. It may be the spot-buying information. Is that something that would be of interest to you?

D'Aquila: Yes. I've used Ariba Discovery in the past. I think there were a lot of empty requests we would respond, and then they wouldn't be viewed. I'm expecting that with the Spot Buy, because it will come directly out of the SAP application and will be someone keying in a request and looking for the bids, we'll get better leads from the solution. I'm looking forward to see what comes of it.

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: Ariba, an SAP Company.

You may also be interested in:

• Blue Marble Media Shows How Mid-Market Selling Gains New Life Via Ariba Discovery
• Ariba LIVE roadmap debrief: Cloud data analytics
• The Networked Economy Newly Forges Innovation Forces for Collaboration in Business and Commerce, Says Author Zach Tumin
• Collboration-Enhanced Procurement and AP Automation Maximize Productivity and Profit Gains in Networked Economy, Says Ariba's Drew Hofler
• Ariba Network Helps Cox Enterprises Manage Procurement Across Six Different ERP Systems
• Ariba CMO Tim Minahan on how networked economy benefits spring from improved business commerce and cloud processes
• Ariba Dynamic Discounting Gives Companies New Visibility into Cash Flow to Improve the Buying Process

Millennium Pharmacy takes SaaS model to new heights via policy-driven operations management and automation approach

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: VMware.

Managing applications sprawl has long been a burr in the IT saddle, and the popularity of software-as-a-service (SaaS) applications hasn't exactly been a balm on the situation.

As with on-premises applications, the key to SaaS and hybrid apps is getting better visibility and operational data on the applications' health, and then automating the processes across standardized methods and controls.

Easier said than done. That's why the next BriefingsDirect IT innovator interview examines how an online pharmaceutical services provider, Millennium Pharmacy Systems, Inc., has successfully deployed mission critical SaaS applications, and then implemented advanced IT management and operational efficiency processes and systems to keep all the applications up to date, compliant, performant, and protected.

To learn more about how real-world automation and operational efficiencies helps improve their business results and customer retention, we sat down with Leon Ravenna, Vice President of IT and Operations and Information Security Officer at Millennium Pharmacy Systems, Inc., based in Cranberry Township Pennsylvania. The interview is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions. [Disclosure: VMware is a sponsor of BriefingsDirect podcasts.]

Here are some excerpts:

Gardner: You deliver your value via SaaS. What has become key about managing the applications well?

Ravenna: Depending on what the customer needs, we may set up the entire environment for them, networks, wireless, scanners, and printers, or they get to us through their own equipment and internet connections. But it's all SaaS. 

Our SaaS application has 250 separate SQL databases on seven SQL Servers, running in a VMware environment and that helps me dramatically cut my licensing cost for SQL Server and helps to manage them in a high availability way.

I've been here about 14 months. One of the things that we looked at doing right, when I came in, is taking both the data centers that we have -- one is owned and one is a co-located facility -- and eliminating a lot of the older hardware that we had.

What we looked to doing first was consolidating, getting rid of the older hardware, and moving us to a much better state. We are now about 85 percent virtualized. Our  primary datacenter is for our customer-facing application, a SaaS application, built on SQL/.Net and Silverlight, for about 250 nursing care facilities on the East Coast.

Gardner: What have you gotten, in addition to efficiency, perhaps in terms of reliability?

Ravenna: We had a couple of older Dell blade chassis, and inevitably you would lose the power supply or a server, and I just don’t have that now. From an operational standpoint, it just helps to be more efficient. It has the ability to turn new servers up faster. It’s not something that we do all the time, but it helps me be much more efficient. I have a fairly small staff, and my goal is to let them sleep at night.

By having more VMware in place, as I said, about 85 percent virtualized, it allows me to do that. If the server fails, they applications move to a different server. I have the ability to upgrade the servers on the fly. It allows me, from an operational standpoint, to be more secure in what we're doing.

And it helps me lower my cost, because I am not as worried about my HVAC. I have less equipment to worry about. I have less break-fix to worry about. All in all, it helps me be remarkably more efficient.

Gardner: Let’s learn a bit more about Millennium Pharmacy.

Ravenna: We host a system for about 250 nursing-care facilities. This basically controls all of the medications that a patient would need. It does our medical reordering and passes that information in an entirely integrated fashion back to our in-house systems for billing and filling of prescriptions.

As a patient, you don’t have much time with your nurse. The nurse is typically gathering your drugs. We have our own pharmacies that service those homes. We deliver, in a cellophane sealed package, your medications.

We're working to implement the new HIPAA regulations so we can be even tighter in that space.

These packages say, "Mr. Smith, take this at dinner time." There's a barcode for every drug, and when the nurse gives them the drug, they use a wireless scanner to scan that barcode and it automatically reorders the next set of drugs. We give patients about a three- or four-day supply, as opposed to 45- or 90-day supply, which cuts the cost for the nursing care facility itself. Then, we manage all of that data back to our other systems, that manage the filling of new prescriptions and billing and then we deliver every day.

The healthcare space is fairly stringent, and and getting more so with the new HIPAA regulations. New ones just came out on March 26 of this year, and the enforcement and penalties are much greater. There’s some significant items that have  changed, but really it’s the enforcement and penalties, things around encryption, and protecting customers' data.

We also have to protect confidential information and so we need to be very secure. We're working to implement the new HIPAA regulations so we can be even tighter in that space.

Gardner: This is all done through SaaS and cloud. There are no on-premises installations of your application. Is that right?

Ravenna: Only one facility out of our 250 has their own system. They are large, and one of their requirements was to have their own, but we support the rest of them, approximately 250, all cloud-based. They can get to it from their Internet connection.

All SaaS

Gardner: We're talking about being mission critical, people getting their medicine. We're also talking about being highly efficient. What were some of the requirements in terms of the infrastructure, particularly as we look now towards managing so many different instances and the ability to be agile and fire up new versions of VMware and to get those apps up and running? What were some of your requirements just from a management perspective?

Ravenna: It had to be easy. I have three system engineers. I only have a couple of network engineers. We support, on the network side, approximately 250 VPN tunnels out to customers, and as you said, it's mission critical. If people don’t get their drugs, it’s a bad day. We take that mission very seriously, making sure those systems are up and running.

From an operational or management standpoint, we really need to be monitoring to know what’s happening and when. Having VMware in that mix gives us the ability to make things consistent, but it also helps to  reduce our cost from a licensing standpoint and helps us manage them better, because we can see what’s happening at any given moment.

One of the nice things about VMware is that it’s just rock solid. We're kind of weary of knocking on wood, but it’s rock solid for us. It gives us the ability to move applications on an as-needed basis. We can upgrade things on the fly. In one data center, we are currently on 5.1, and we're moving the other data center to 5.1.

Gardner: So as a mid-market organization, you're resource constrained, you just don’t have a huge stuff, and you need automation. You need to have the ability to manage things, perhaps remotely.

It lets us be a lot more efficient with what we are doing. It lets us manage more efficiently.

So it's this notion of total approach to management, rather than silos, rather than integration of different management approaches and products together. That just wouldn’t fly. What have you done to improve management?

Ravenna: There are a couple of things. We're evaluating vCenter Operations Management Suite. One of the things that it has  let us do is dramatically reduce the size of our virtual machines (VMs).

Typically, if you're moving from a physical environment, VMware is a lot more efficient and it’s really kind of surprising seeing some of the reports that come back from vCenter Operations Management that tell you, realistically, you are running this server with six gigabytes of memory, but you are only really using one.

It’s a little bit spooky to look at it and ask if we really want to go that far. In some cases we would say, "Yes, let’s go ahead and do that," and it’s been, for the most part, dead-on. We've looked at a couple of things where our gut didn't say it was the right thing, even though it probably was. There's still a little bit of that old-school mentality that says you need to get more resources, when in fact the server may not even need them.

It lets us be a lot more efficient with what we are doing. It lets us manage more efficiently, because I can put more databases or more servers on each VM host.

Gardner: What was the ramp-up in terms of the skills and the running of the management system?

Ravenna: For vCenter Operations Management Suite, it wasn’t too bad at all. We were talking to VMware, and they said it would be potentially beneficial. We started up, ran it, and there really wasn’t that much training that was necessary.

The harder thing was when they came back and said we were over provisioned. That was  making that rationalization that VMware is a lot more efficient than physical hardware. It meant taking some of our servers from 4 GB RAM down to one half that, because that’s where they needed to be. In some cases, you want to be a little bit safe. You ultimately find out that the tool was right, and you were being gun shy.

Move quickly

Gardner: So when you look at the total picture, you need to be agile and able to move your resources quickly. What's next on your radar?

Ravenna: I have an overriding philosophy, after doing this for last 20 plus years. The simpler I can make it, the more I get to sleep. Sleep is a recurring theme and realistically, that means fewer calls during the night.

We're looking to move to vCloud Suite, in particular Site Recovery Manager (SRM), and using the vCenter Operations Management Suite to allow us to be more efficient. It just helps us work better and faster. Some of the key components will help me to be as efficient as possible. I may eventually need  to build out virtual data centers, so the VMware vCloud Director helps me.

My whole goal is to be able to make things as simple as possible and as easy as possible to manage, and these tools let me do that and be more efficient. The VMware Operations Management Suite and the vCloud Suite will help me get there.

Those are some of the key things I'm looking for in the future. For me, having multiple data centers, the ability to have VMware SRM, is just a great thing. It’s getting ready to thunderstorm here, and having the ability to move my services to a different data center that’s about 35 miles away is key.

I'm very leery about putting my data just in a cloud with everybody else. It would have to be very specific to the healthcare space.

Gardner: It’s pretty interesting that the notion a one-size-fits-all, plain vanilla, public cloud wouldn’t be attractive to you.

Ravenna: I'm very leery about putting my data just in a cloud with everybody else. It would have to be very specific to the healthcare space, because you end up signing a business associate agreement with me.

It would have to be what I would term carrier-class facilities that can prove they are in the healthcare space, dedicated to being there, and abide by all the HIPAA Rules. We have all of the things like PCI and SSAE 16. Those type things really need to be there and geared toward the healthcare space specifically for me to be able to look at them.

No choice

I'm not a guy who wants to understand electricity or heating and ventilation, but unfortunately in the world that we live today, in the mid-market space, you have your own data centers. You have no choice. You have to play in that game. Anything that I can do that helps me to address those issues to run cooler or run with less equipment is just all goodness.

Gardner: How do you convince the bean counters that this is the right thing to do?

Ravenna: It’s not necessarily a metric, but when you're spending less year over year on equipment, that’s evidence. Every server you buy is going to be in the roughly $5,000-$10,000 range. If I'm not doing that, I'm agile and nimble in being able to say that I can accommodate that.

That's opposed to the old process which was, get the capital done, go to finance, and wait six weeks to get a server, and then put it in. Inevitably there is something that’s constrained. So that six-week lead time becomes eight or ten weeks. It just helps me to move faster and spend a lot less capital money.

One of the things that I mentioned a little bit ago was licensing from a SQL standpoint, but things like backup that are running on a per-processor standpoint within VM drop my overall cost.

Anything that I can do that helps me to address those issues to run cooler or run with less equipment is just all goodness.

One of the things that it’s helpful as well is the dashboarding ability to be able to show what’s going on, what’s happening, and what the environment looks like. vCenter Operations Management Suite gives me that and it's all goodness.

If you're comparing the cost of, say, a two processor server, and you are going to go buy four, five, or six servers, take one of those servers and put that investment into VMware and vCenter Operations Management. You're going to be happier in the long term.

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: VMware.

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Blue Marble Media shows how mid-market cloud selling gains new life via Ariba Discovery

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: Ariba, an SAP Company.

This latest BriefingsDirect podcast, from last month's 2013 Ariba LIVE Conference in Washington, D.C., explores how Blue Marble Media in Atlanta has been using so-called spot-buying capabilities on the Ariba Network and Ariba Discovery to find new sales channels and new clients in the cloud.

To learn more about how agile procurement works for on the mid-market sell side, we're joined by Cal Miller, Vice President of Business Development at Blue Marble Media.

The interview is conducted Dana Gardner, Principal Analyst at Interarbor Solutions. [Disclosure: Ariba, an SAP company, is a sponsor of BriefingsDirect podcasts.]

Here are some excerpts:

Gardner: Tell us a little bit about your company -- your size, what services and products you provide. And why is the cloud not intimidating to you as a smaller firm for selling and finding new customers?

One of the real benefits we found out early on Ariba Discovery is we can help educate people on the process of looking for companies like us.

Miller: Even though we're very, very small, less than $2 million in revenue, we have clients like Georgia-Pacific, Verizon, Ariba, and the CDC. We work with a lot of medium-sized companies and even startups, very small ones. So the whole planet is our opportunity, if you will. We develop video, motion graphics, and animation for sales support, marketing, corporate communications, and just about any type of visual presentation that you might need.

Gardner: Why go through non-traditional channels to get to new business?

Miller: Actually, it’s a very overcrowded supplier sector. We're a little different in that we're a turnkey provider. We're not just a “video house.” There are many of those out there, and they're good firms, but we're much more strategic. We do well when we begin a project and can interface at a C level with a company and help them come up with the strategy and the solution that eventually drives the message.

Our strength quite often is something that people don’t know is even out there. One of the real benefits we found out early on Ariba Discovery is we can help educate people on the process of looking for companies like us and then hopefully they are going to say, "Okay, we'll call you back."

Halfway to goal

Gardner: As someone who is already on the Ariba Network, they need to know and need to acquire, so they're halfway to finding the goal. You're going to need to go halfway toward them with your specific differentiating value and make that understood.

This notion of spot buying however expands that, it allows more than just a structured procurement professional who is looking for services and extends this down to people who are doing ad hoc, occasional, once-in-a-blue-moon types of buying. How has that worked out? Tell me a little bit more about how you even got involved with Ariba Discovery and spot buying at all?

Miller: In our world spot buying is probably half of our total business. Even large companies may only have a need for a high-profile video series once a year, two times a year, or every other year. So the people that are charged with developing that solution quite often aren't the people who are going to be writing the check or making the procurement, and vice versa.

Miller

So the real challenge there is to get these people to understand that there is a vetting process. Ariba has provided this service, so a company like us can sit up and say, "Hey, we're a little different than the other guys. Let’s engage and start some dialogue."

Gardner: What have been the results? Let’s learn first about how long you've been doing this? What’s the timeline on how you have been using Discovery and extending that to that spot buying type of clientele?

We've learned that you still need to respond, because you get that opportunity to almost simulate a face-to-face meeting.

Miller: It will be a year in a couple of weeks. We took a few months to learn the system, ramp up, and get going, but we've already had a very nice project and contract from a national bank that came through the network. And we have kind of a follow-up project with them. So that will be additional revenue.

We have several opportunities that have been presented to us and we are in different stages of developing those projects as they move forward.

Even on a few of the introductions that we've passed up, we've made a response, but we knew it wasn’t a good fit. We've learned that you still need to respond, because you get that opportunity to almost simulate a face-to-face meeting, because they get to learn about you, and you're building a relationship.

One of the biggest challenges that people on this network don't realize is to not look at your computer screen like it’s just another interface computer screen. You're looking through the eyes of Ariba at a real, live person on the other end- who can write you a check, and that changes the dynamic of how you communicate through the Network.

Gardner: And if it’s not a right fit for them, they might have a word-of-mouth, community, or social connection with someone that they could refer you to. So there are concentric circles of engagement.

Circles of engagement

Miller: That happens very often, especially with the larger companies. It’s, "These guys can do this. Here, give them a call in three months or pass this on to Joe, because they are going to need this." That’s worth its weight in gold. You can’t get that by knocking on the door or shooting out a bevy of emails. It just doesn’t happen.

Gardner: Now, as a mid-market company, a smaller company, you are of course price conscious yourself. What was the spend experience when you got involved with Ariba? How did you step into the water?

Miller: We had been a supplier to Ariba for about a year and a half, and then it was suggested that we needed to be on the network.  We looked at it and started at the basic level. Within about four months, we realized that this is really a good deal. So I spent a lot of time learning more about it, and we immediately upgraded to the Premium Advantage level. It's the best investment we ever made.

And for us as a small company, and many of you listening may be able to identify with this, we have all these different marketing and sales-support options out there, and they are all good tools in their own right. But if you have limited time and budget, to me it was a no-brainer. This is the best way to make use of our time, get the quality of leads that we need, and make the contacts that we're looking for at a C level.

We immediately upgraded to the Premium Advantage level. It's the best investment we ever made.

Gardner: And that seems to be especially the case when an organization like yours has a significant, maybe even a majority, portion of your sales in that ad-hoc spot-buying type of engagement.

Miller: Very well summarized, Dana. That's very true. For a company like us, we would love to get ongoing contracts, but in our world and with the product and service we offer, it doesn’t come that way. So spot buying is going to be the focus of how we utilize our partnership with Ariba.

I wish this had been around 20 years ago.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: Ariba, an SAP Company.

You may also be interested in:

• Ariba LIVE roadmap debrief: Cloud data analytics
• The Networked Economy Newly Forges Innovation Forces for Collaboration in Business and Commerce, Says Author Zach Tumin
• Collboration-Enhanced Procurement and AP Automation Maximize Productivity and Profit Gains in Networked Economy, Says Ariba's Drew Hofler
• Ariba Network Helps Cox Enterprises Manage Procurement Across Six Different ERP Systems
• Ariba CMO Tim Minahan on how networked economy benefits spring from improved business commerce and cloud processes
• Ariba Dynamic Discounting Gives Companies New Visibility into Cash Flow to Improve the Buying Process
• Ariba, IBM Deal Shows Emerging Prominence of Cloud Ecosystem-Based Collaboration and Commerce

Dissecting the Converged Cloud news from HP Discover: What it means

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: HP.

The next edition of the HP Discover Performance Podcast Series brings together three HP executives to explore the implications and business value from the Converged Cloud portfolio updates announced at HP Discover 2013 in Las Vegas.

There's no hotter topic -- and nothing more top of mind these days -- than cloud computing. Not surprisingly, HP has made that a major focus at day two of Discover.

To put some context around it all, BriefingsDirect assembled Chief Evangelist at HP Software, Paul Muller; Christian Verstraete, Chief Technologist for Cloud Solutions at HP, and Tom Norton, Vice President for Big Data Technology Services at HP. The panel was moderated by Dana Gardner, principal analyst at Interarbor Solutions. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

Here are some excerpts:

Gardner: Christian, tell us about the state of the market before we get into HP’s response to it.

Verstraete: What's happening in the market today, is that on one end, you have startups that are rushing to the cloud very quickly, that use cloud and don't use anything else, because they don't want to spend a penny on building up an IT department.

Verstraete

On the other extreme, you have very large corporations that look at all the things that are unknown around cloud and are sticking their toe in the water.

And you have everything possible and every possible scenario in the middle. That's where things are getting interesting. You have forward-looking CIOs who are embracing clouds, and understand how cloud can help them add value to the business and, as such, are an important part of the business.

You have other CIOs who are very reluctant and that prefer to stay managing the traditional boat, if I can put it that way, in keeping and providing that support to our customers. It's a interesting market right now.

Muller: The challenge that both vendors and consumers have is that one size does not fit all. When you find yourself in that situation, you only have two responses available to you.

Muller

If you're a one-trick pony, if you have only got one technology, one approach, then it's one size fits all. Henry Ford, one of your fellow countrymen, once said that you can have the car in any color you want, so long as it’s black.

It's a great idea in terms of simplifying what your choices are, but it doesn't help you if you're an enterprise that's struggling to deal with complexity and heterogeneity.

We believe that there are three absolutely critical priorities that anyone looking into cloud should have. The first is confidence. Confidence, because you are moving typically mission-critical services in it. Even if it's develop and test, you're counting on this to work.

The second is consistency. There is absolutely nothing to be gained by having a cheap cloud service, on one hand, and then having to retrain people in order to use that, because it's completely different from your internal systems. It's just moving costs around. So consistency is absolutely critical.

Giving users choice

The third piece we talk about all the time, choice. You should have your choice of operating system, database, and application development environment, whether it's Java or .NET, you shouldn’t have to compromise when you're looking at cloud technology. So it's those three things -- confidence, consistency, and choice.

Gardner: Here at Discover, we're hearing a lot about a variety of announcements for Converged Cloud. Let's look at a couple of these major aspects of the announcements and then delve into how they come together, perhaps forming a whole greater than the sum of the parts.

The first part, Christian, is this real emphasis on OpenStack and the Cloud OS. So give us a quick overview of where HP is going with OpenStack and Cloud OS and how that relates to some of the requirements that we've just discussed?

Verstraete: What we want to do across the different clouds that we offer -- private cloud, the managed cloud, and the public cloud -- is a capability to be able to port workloads very quickly to build some consistency around them.

It will also provide our customers with the capability to test and play with Cloud OS through a sandbox. So there's a lot of emphasis on that.

Cloud OS is all about that. It’s about building a consistent infrastructure environment or infrastructure management environment to do that. And that's where we are using OpenStack.

So what is cloud OS? Cloud OS is nothing more than HP’s internal OpenStack distribution, with a set of additional functionalities on top of it, to provide a second-to-none infrastructure-as-a-service (IaaS) delivery that can then be used for our private cloud, our managed cloud, and is already used for our public cloud.

That’s the first thing that we announced. We are building on top of that. It’s an evolution of what we started about a year-and-a-half ago with Converged Cloud. So we just keep moving and working around with that.

We also announced that we not only support Cloud OS in our traditional blade environment and our x86 servers, but also on the newly announced HP Moonshot servers. That combination may become interesting when we start talking about the "internet of things" and a number of other things in that particular area. It will also provide our customers with the capability to test and play with Cloud OS through a sandbox. So there's a lot of emphasis on that.

Gardner: It also seems that you are expanding your support of different virtual machines (VMs), so heterogeneity is supported. As Paul Muller pointed out, it's supporting all the various frameworks. Is there something fundamentally different about the way HP is going about this cloud support with that emphasis on openness vis-à-vis some of the other approaches?

One-trick pony

Verstraete: Many of the other players, many of our competitors, have what Paul mentioned earlier, a one-trick pony. They're either in the public space or the private space, but with one hypervisor. Where we're starting from, and that’s the essence of Converged Cloud, is to say that a company going to cloud is not one size fits all. They're going to need a combination of different types of clouds to provide, on one hand, the agility that they need and, on the other hand, the price point that they're looking for.

They'll put some stuff in their private cloud and they'll put some other stuff in the public cloud. They'll probably consume software-as-a-service (SaaS) services from others. They'll probably put some things into a managed cloud. It’s going to be a combination of those, and they're going to have to handle and live with that combination.

The question is how to make that easy and how to allow them to access all of that through one pane of glass, because you don’t want to give that complexity to the end users. That’s exactly where Cloud OS is starting to play. Cloud OS is the foundation for us to do that.

Gardner: Tom Norton, seeing that this field is very diverse in terms of the needs and requirements, it seems like a perfect fit for lots of consulting, professional, and support services, but we don't often hear about them in conjunction with cloud. Tell us a little bit about why the market is ripe for much more emphasis on the services portion here?

Norton: As you start to take advantage of the varying services that are available through the cloud, or that you want to present to the cloud, the varying presentation formats, the varying architectures are an issue for whether you're a startup or in the enterprise.

Norton

From a consulting perspective, you need to have a strategy and understand the challenges and complexities of that hybrid type of delivery or that hybrid consumption, and establish some type of design for how that's going to be used and presented. So consulting becomes very important the more you start to consume or present cloud-based type services.

When you start thinking of that design and that whole approach from balancing across the network, to balancing the infrastructure component pieces, you need to have some kind of consistent support structure. One of the most expensive parts of this is going to be how you support those different environments, so that if you have an issue, you're not doing component-based support anymore. You need a holistic-based cloud support.

Having advice from seasoned experts can help you avoid some of the pitfalls of cloud adoption.

For organizations truly to transform themselves as an IT organization and be able to present their service, which in many cases is an application, that app may be something presented internally to business units because the business units are getting some value, or even externally to a customer or to a customer’s application.

Those apps are designed, in many cases, in either a more mainframe-based environment or also in the distributed environment. When you start thinking of presenting it as a service, there are other considerations that need to take effect.

When you think of modernizing applications to a cloud-based presentation, there are multiple layers that have to be considered to even address the applications.

You start looking at how that application performs in terms of more virtualized and automated environments. You also think about how you can manage that application from a service perspective. How do you monitor the application? How is it metered in terms of the presentation? How is that application presented within a service portfolio or a service catalog? How do you then manage and monitor the application for service operations? The user demands an end user experience for meeting a certain service level.

When you think of modernizing applications to a cloud-based presentation, there are multiple layers that have to be considered to even address the applications. When you think about the application piece and the work that needs to be done, you also have to think about the management component pieces of it.

That’s why you'll hear of services around, say, cloud design services that will enable us to take a look at that service portfolio, look at the service catalog, and understand the application presentations and how you can ensure quality delivery and ensure that you're meeting those service levels, so that business can continue to take advantage of what that application provides to them.

So from an application perspective, you have both the cloud design piece that’s referred to that, but, at the same time, you have to address the complexities of the application.

Verstraete: Tom, allow me to add one point. You talked about the application, but the next point associated with that is, on what device am I going to consume that application? Increasingly, we're seeing bring your own device (BYOD), and it’s not just PCs, but also tablets, phones, and all of the other things.

Managing devices

We have to have the capability to manage those devices and make sure that we have the appropriate security levels and that they're compliant, so that I can run my enterprise applications on those devices without any trouble. That complements all of this.

Dana, to go back to a question that you had earlier, this is where all of these things are starting to come together. We talked about Cloud OS and the infrastructure and the environment, so that I could build on my applications. We talked about the Application Transformation Services, which allow us to put those applications on top of that. And we're talking about the other extreme, which is consuming those applications and the devices on which we are starting to consume those applications.

Regardless of whether this is in a private cloud, a managed cloud, or a public cloud, that’s where you start seeing the different parts and the different pieces coming together.

Gardner: Why is the hybrid model so important with HP strategy?

The CIO had better understand the potential issues related to the security and compliance of what is happening, and start acting on it.

Verstraete: Whether companies like it or not, most large enterprises today already have a hybrid model. Why? Because they have a lot of shadow IT, which is consumed outside the control of IT. It's consumed from external services, being in most of the cases public clouds. So that’s already a fact of life.

Why is that used? Because there's a feeling from the business user that the CIO can’t respond fast enough. So the CIO had better understand the potential issues related to the security and compliance of what is happening, and start acting on it.

He can't speed up his delivery of what the business is looking for by developing everything himself and taking the old fashioned approach. I choose an application. I test the application for six months. I install the application. I configure the application, and two years down the road, I deliver the application to the business users.

What becomes clear quickly to a lot of CIOs is that if they take a hard and cold look at their workloads, not all workloads are the same. Some of them are very specific to the core of what the enterprise is doing. Those should stay within their private cloud.

There are a bunch of other things that they need to deliver. Frankly, they are no different from what their competitors are doing. Do those need to be in a private cloud or could they be in another type of environment, a managed cloud or public cloud? That automatically brings you to that hybrid environment that we're talking about.

New core competency

Gardner: Paul Muller, how is hybrid perhaps the new core competency for IT, managing hybrid processes and hybrid systems and managing the continuum?

Muller: Again, Dana, you get to the core of the issue here, which is that it’s about a shift. This is a generational shift in how we think about building, buying, and integrating IT services in the service of the business or the enterprise, depending on where you work.

It’s about a couple of key shifts. It’s about the balance of power shifting from IT to the business. We have probably said this countless times over the last three decades, but the simplicity, the focus on user experience, the ease with which competitive services can be procured from outside by laypeople from an IT standpoint has created a symmetry in the relationship between business and IT that no one can afford to ignore.

The second generational shift is the speed with which people expect response to their ideas. Techniques like agile and dev-ops are changing the way we think about building and delivering services.

Finally, to your point, it used to be that you either build or you buy, you either outsourced everything or you did it all yourself. Now we live in a world where you can consistently do both. I don’t believe that the majority of IT professionals are ready for that new reality in terms of processes and people, not to mention the software stack, the infrastructure stack, on which they're building services.

This is a generational shift in how we think about building, buying, and integrating IT services in the service of the business or the enterprise.

There's a lot of work to be done. It sounds daunting. The good news is that if you take a smart approach, some of the work that Tom and our Professional Services and Technologies Services team have been working on, it helps ease that transition and avoid people repeating the mistakes of some of the early adopters that we have seen.

Gardner: Tom Norton, as we factor what Paul said about transitioning the organization from supporting technology to supporting the continuum of a hybrid approach, how big a change is that for an organization?

Norton: It's a significant change, when you think of how traditional support structures have been. When you look at more complex systems, and you can think of a hybrid cloud environment as being a complex cloud system itself, traditionally support structures have been component-based and they've been infrastructure-based, or application-based. So you look at a storage support solution, or you may look at a network support solution or a compute solution itself.

When you start thinking of a complex system, like a cloud model, and especially a hybrid cloud model, where you have varying delivery mechanisms and varying supporting structures, supporting that can be a very complicated issue. It's one that many organizations are unprepared to do, especially if they're going to try to approach it strategically, as opposed to being a opportunistic-type cloud environment.

Access to expertise

What IT is trying to do today and the question they keep asking is how they can view this as being that kind of ecosystem that has a singular support structure to it, where they can get access to expertise.

That's what HP is stepping up to do. With our own experience, across the spectrum, building on-premise and private, working in the managed infrastructure places, we have public cloud experience and we also have the experience of the integration across all of those.

The benefit from a services perspective for our customers is that we can help break down those isolated barriers in singular cloud services that a customer is consuming and give them a support structure that bridges all of those and truly approaches a converged support structure for managing that hybrid environment. That's what we're working towards and that's where our announcements have been all about.

We can help break down those isolated barriers in singular cloud services that a customer is consuming and give them a support structure that bridges all of those.

Gardner: What is the most important change that HP has brought to the cloud landscape with this series of announcements?

Verstraete: Two things -- first, and you hit the nail earlier, the whole concept of hybrid cloud, looking at multiple ways and multiple clouds to address the needs of the business. And second, within that frame of hybrid cloud, making sure that there is consistency across the different clouds, and that's where we're using OpenStack.

Gardner: Paul Muller, what's different in your mind about what HP has been doing this week?

Muller: It is all about accelerating the introduction of applications and improving the user experience. It is not about technology for technology’s sake. The single biggest difference.

Differentiated

Gardner: And lastly, Tom, what jumps out at you as a differentiator in terms of the market in general and what HP is doing?

Norton: I think the market is looking for someone that can help with the integration component pieces of it. As the hybrid and heterogeneous deployments continue to grow and more and more services are offered that way, organizations need help consolidating that into a more integrated approach, so they have that kind of overall cloud concepts that give them the value they are looking for. So it's becoming more and more about integration.

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: HP.

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With Cloud OS, HP takes up mantle of ambassador to the future of hybrid cloud models

HP's innovations in its Converged Cloud portfolio, announced today at HP Discover 2013 in Las Vegas, are aimed at better ushering large enterprises from legacy to hybrid cloud environments.

Despite the great interest in SaaS and cloud, many large enterprises are still grappling with the right mixture of on-premises, hosted and various cloud deployment models for their applications, infrastructure and data. And the formula for picking which apps and assets should run where will be a changing one, as business goals, economic pressures and technology advances all conspire to make last year's IT model obsolete. Ongoing.

HP officials say the next phase of a common OpenStack-based architecture for HP’s private, managed, and public cloud offerings recognizes this dynamic environment. Not only does one-size cloud not fit all, no company can predict what their risk path is nor how well cloud will work for them in coming years. That's why choice and operating environment standardization -- and not just price -- must be the critical requirements for cloud adoption.

"You should have your choice of operating system, database, and application development environment, whether it's Java or .NET, you shouldn’t have to compromise when you're looking at cloud technology," said Chief Evangelist at HP Software, Paul Muller. "We have focused on ensuring that the cloud infrastructure, the workloads, the automation, the compliance tools, everything around that, are focused on optimizing the application experience."

But HP also acknowledges that where cloud clearly makes sense, a quick path to its benefits must be made. And so HP also announced new software and services to accelerate time to market for private cloud implementations, and unveiled new capabilities in HP’s managed and public cloud solutions under the Converged Cloud banner.

Research commissioned on behalf of HP predicts that by 2016, some 75 percent of enterprise IT will be delivered across private, managed and public clouds. Further, half of the respondents believe that open standards are important in the emergence of cloud computing. This indicates that customers want an open, hybrid cloud solution to generate new opportunities, drive competitive differentiation and lower the cost of operations, said. HP.

HP Cloud Operating System (OS) is therefore an open and extensible cloud technology platform that leverages the community strength of OpenStack technology to enable workload portability, simplified installation and enhanced life cycle management across hybrid clouds, said HP. [Disclosure: HP is a sponsor of BriefingsDirect podcasts. My travel to HP Discover 2013 was paid for by HP.]

HP CloudSystem, HP’s private cloud offering, already embeds Cloud OS technology. To help customers get started quickly with an initial private cloud deployment, HP also is offering the HP CloudSystem Enterprise Starter Suite. This solution allows organizations to get started with rich application cloud services, and reduces up-front costs by up to 20 percent with the bundled offering.

Verstraete

Christian Verstraete, Chief Technologist for Cloud Solutions at HP, explained the importance of Cloud OS. "What we want to do across the different clouds that we offer -- private cloud, the managed cloud, and the public cloud -- is a capability to be able to port workloads very quickly to build some consistency around them," he said. "Cloud OS is all about that. It’s about building a consistent infrastructure environment or infrastructure management environment to do that. And that's where we are using OpenStack."

Open Stack distribution

"So what is cloud OS? Cloud OS is nothing more than HP’s internal OpenStack distribution, with a set of additional functionality on top of it, to provide a second-to-none infrastructure-as-a-service (IaaS) delivery that can then be used for our private cloud, our managed cloud, and is already used for our public cloud," said Verstraeta.

But while HP is making an OpenStack-based cloud platform environment, it is bundling hardware and software-defined infrastructure so that the ease of deployment -- similar to appliance benefits -- makes those seeking openness a value and simplicity offer they can't refuse.

Inexpensive and energy-stingy HP Moonshot servers also will be offered with HP Cloud OS, providing simplified provisioning and management for specific cloud workloads such as dedicated hosting and large-scale websites. HP Cloud Services also leverages HP Cloud OS technology. To encourage customers to evaluate and understand the benefits of an OpenStack-based architecture for their cloud needs, HP is offering HP Cloud OS Sandbox for experimentation at no cost.

Forty-three percent of respondents in the HP-commissioned survey said that finding the right strategic partner to get them started was a barrier to cloud adoption. So to help guide customers, HP introduced the HP Converged Cloud Professional Services Suite.

It’s about building a consistent infrastructure environment or infrastructure management environment to do that.

HP announced such new services designed to help customers take advantage of the cloud. These new offerings include HP Converged Cloud Support, HP Cloud Design Service, HP Cloud-ready Networking Services, HP Proactive Care for CloudSystem, and HP Cloud Security Risk and Controls Advisory Services, as well as enhancements to HP Applications Transformation to Cloud Services.

"From a consulting perspective, you need to have a strategy and understand the challenges and complexities of that hybrid type of delivery or that hybrid consumption, and establish some type of design for how that's going to be used and presented. So consulting becomes very important the more you start to consume or present cloud-based type services," said Tom Norton, Vice President for Big Data Technology Services at HP.

"This is not just a technology decision that you need guidance on. It's structuring contracts and understanding how to deal with termination of service -- what happens to the intellectual property (IP) you have in the cloud. That's where having advice from seasoned experts can help you avoid some of the pitfalls of cloud adoption," said Muller.

"With our own experience, across the spectrum, building on-premise and private, working in the managed infrastructure places, we have public cloud experience and we also have the experience of the integration across all of those," said Norton.

HP Enterprise Services has enhanced its portfolio of cloud service offerings to address increased customer needs for mobile and enterprise applications. These include:

• HP Enterprise Cloud Services for Enterprise Applications that give clients choice and flexibility when integrating and deploying applications in the cloud while maintaining business continuity and ensuring data security.
  
• HP Mobile Enterprise Cloud Solution that provides a fully managed and integrated set of mobile consulting and management services to securely enable applications and data sharing from many device types.
  
• HP Enterprise Cloud Services - Private Cloud that enables clients to quickly adopt cloud services by designing, building and managing a complete Infrastructure as a Service that creates the foundation for an enterprise-wide shared IT services model.
  
• HP Cloud Security Risk and Control AdvisoryServices, a new offering in the HP professional services portfolio that helps clients safeguard their information, manage potential for data breaches and remain compliant while transitioning applications to public, private and hybrid clouds.  

 Engaging customers

In addition, HP Autonomy introduced the Autonomy Marketing Cloud, a cloud-based version of the Autonomy Marketing Performance Suite, enabling organizations to understand, attract, engage and convert customers in real time.

New HP Cloud Services capabilities make it easier and faster for enterprises to simplify the development and deployment of applications in the public cloud. Enhancements include:

• Access to new, larger instance types that enable users to run big data analytics and high-performance computing workloads in the public cloud.
  
• New virtual private cloud network functionality, powered by software-defined networking that provides advanced security when connecting their public cloud to on- site networks.
  
• New custom image uploading that increases customer productivity by simplifying the set up and deployment of instances with images unique to their business requirements.
  
• A new Bulk Import Service that speeds application delivery by allowing users to provide hard drives for direct data upload into HP Cloud Block Storage and HP Cloud Object Storage.

In other infrastructure news at Discover, HP yesterday unveiled Project HAVEn, which leverages HP’s analytics software, hardware, and services to create big-data ready analytics applications and solutions. HAVEn pulls together the growing army of HP analytics technologies and capabilities -- from Autonomy to Vertica to ArcSight and more -- allowing all kinds of data and information to be exploited in unison, with the dependencies and relationships mappable and hidden insights attainable across sources.

You may also be interested in:

• Podcast recap: HP Experts analyze and explain the HAVEn big data news from HP Discover
• HP's Project HAVEn rationalizes HP's portfolio while giving businesses a path to total data analysis
• Insurance leader AIG drives business transformation and IT service performance through center of excellence model
• HP BSM software newly harnesses big-data analysis to better predict, prevent, and respond to IT issues
• Right-sizing security and information assurance, a core-versus-context journey at Lake Health
• HP Discover Performance Podcast: McKesson Redirects IT to Become a Services Provider That Delivers Fuller Business Solutions